Puerto Rico, Not States, Losing Healthcare Funds

Posted March 13, 2013

The Fiscal Year 2014 budget proposed by U.S. House of Representatives Budget Committee Chairman Paul Ryan (R-WI) would cut Federal healthcare funding for low and middle income individuals living in Puerto Rico and other U.S. territories while just eliminating increases for healthcare assistance in the States and the District of Columbia.

The resolution calls for repeal of the 2010 Federal healthcare reform’s expansion of Medicaid, the joint Federal-State/territory program covering health care costs for low-income individuals. It also calls for repeal of ‘Obamacare’s new health insurance exchanges, which would subsidize the cost of health insurance for middle-income individuals. These exchanges will be run by States that choose to do so, or the Federal government in States that do not set up an exchange.

The Ryan budget is expected to be approved by the House but not the Senate. Although chances of its healthcare funding proposals passing both houses of Congress are slim, territories would be the biggest losers under the proposals if passed. Puerto Rico and other territories have one representative each in the House who can only vote in House committees but not for final passage of bills and no representation in the Senate.

Under the new ‘Obamacare” Medicaid expansion, individuals who earn up to 133% of the Federal poverty level would receive Medicaid health coverage in States that agree. Currently, income level eligibility is determined through State-drafted plans but it is often 100% of the poverty level. The Federal government would cover the full cost of the expansion to 133% for three years and then 90% of the cost with no dollar limits on the costs.

The health insurance exchanges in States would subsidize policies for individuals who earn too much to qualify for Medicaid, paying part of the premium costs for people earning up to 400% of the poverty level. The Federal government would pay the total cost of the subsidies.

The territories were treated differently under ‘Obamacare,’ as they are under current Federal law. In Medicaid, Puerto Rico continues to be eligible only for limited funding. The 2010 health care law increased Medicaid funding in the territories by $6.3 from mid-2011 through 2019, of which $5.487 billion was allocated to Puerto Rico.

The nearly $5.5 billion tripled Federal contributions to Medicaid in Puerto Rico. Even with this increase, Puerto Rico is not funded equally with the States in the program. The Federal government is paying only 55% of the cost in Puerto Rico. If the territory were funded equally with the States, the Federal government would pay about 82% — not including the 100% and, then, 90% of the cost of the Obamacare expansion of program eligibility in the States.

It has been estimated that the nearly $5.5 billion in additional funding for Medicaid in Puerto Rico would only enable the insular government to cover individuals up to 100% of the Federal poverty level — the level of eligibility in many States before the Obamacare expansion to 133%.

An additional $1 billion was allotted for health insurance exchanges in the territories, including $925 million in Puerto Rico. The territories could opt to not establish exchanges and use the money for Medicaid instead — but the Federal government would not operate exchanges in the islands if territorial governments do not — meaning that there would then be no subsidies for health insurance for middle-income earners in the territories. This is a new area of adverse discrimination against territories in Federal programs.